Budget deficit narrows as spending target sputters

The national government’s budget deficit narrowed by 57.3 percent to P120.4 billion as of August on the back of slower year-on-year growth in public expenditures.

The fiscal deficit posted at the end of eight months was smaller than the P282 billion recorded during the same period last year.

End-August government expenditures or spending on public goods and services inched up by only 0.9 percent to P2.212 trillion from P2.191 trillion a year ago.

The slight increase in disbursements was outpaced by the 9.5-percent climb in eight-month tax and nontax revenues to P2.091 trillion from the year ago’s P1.909 trillion.

The actual end-August total revenue take surpassed by 0.1 percent the P2.089-trillion programmed goal for the period.

Between January and August, tax collections grew 9.8 percent year-on-year to P1.879 trillion, while nontax revenues amounted P211.4 billion, up 16.1 percent year-on-year.

Compared to what was programmed, tax revenues were 4-percent below the P1.959-trillion target, while nontax collections exceeded the P130.8-billion goal by 61.6 percent.

The end-August take of the Bureau of Internal Revenue (BIR)—the country’s biggest tax-collection agency—jumped 10.6 percent year-on-year to P1.452 trillion.

The BIR’s actual collections were nonetheless 4.4-percent lower than the P1.519-trillion program for the eight-month period.

Meanwhile, the Bureau of Customs collected P411.2 billion from January to August, up 7.2 percent year-on-year but 2.7-percent smaller than the P422.5-billion program.

For 2019, the Cabinet-level, interagency Development Budget Coordination Committee had programmed a wider budget-deficit cap of P624.4 billion, equivalent to 3.2 percent of gross domestic product (GDP).

The government had wanted a bigger budget deficit this year to increase spending on infrastructure and other public investments.

However, the government underspent P1 billion a month from January to April due to the delayed implementation of this year’s P3.7-trillion national budget.

To recall, President Duterte signed the 2019 budget only in mid-April as the two Houses of Congress squabbled over alleged “pork” funds ahead of the May 13 midterm elections.

Due mainly to public underspending, economic growth averaged 5.5 percent during the first half, below the government’s 6-7 percent target range.

But the economic team is optimistic the government will not only achieve its 2019 budget deficit program, but also reverse slower first-semester GDP growth by speeding up the implementation of P803 billion worth of infrastructure projects before yearend.

“The recent spending performance indicates that disbursements are starting to normalize and gradually accelerating. Based on initial bank/treasury data, notice of cash allocation expenditures for the month of August is projected to have picked up at a faster two-digit growth rate of 15 percent,” the Department of Budget and Management (DBM) said in a report this month.

“The implementation of new programs/projects of the Department of Public Works and Highways and the Department of Transportation is currently underway. Based on the revised disbursement program submissions of said departments, spending for the two main infrastructure agencies is heavily concentrated in the second semester,” the DBM added.